”The second example of a little freedom of exchange spreading and creating a lot more freedom is the case of airline deregulation in America. I remember sitting on a Hughes Air West flight from Los Angeles to Las Vegas in 1974. The young couple beside me was scrutinizing a map because they had thought, correctly, that Los Angeles and Las Vegas were much closer than L.A. and San Francisco, and yet, they noticed, their air fare to Las Vegas was much higher than the fare between L.A. and San Francisco. I explained to them that because L.A. and San Francisco are both in California, that route was not subject to federal regulation. Therefore, a solely intrastate airline, PSA (Pacific Southwest Airline), had arisen to take advantage of this loophole in the law. PSA, therefore, was outside the airline cartel that the federal government’s agency, the Civil Aeronautics Board (CAB), was enforcing, and PSA competed by cutting fares. The federally regulated airlines competed by pricing lower due to PSA’s presence. Over the years, many people noted the California anomaly and a similar anomaly in Texas, where Southwest Airlines escaped regulation by serving 3 cities solely within Texas–Dallas, Houston, and San Antonio. Southwest, similarly, charged much lower fares than were charged on comparable city pairs that crossed state lines. Thus was generated some of the public support for deregulation.”